Vice Chief of Army Staff, Lt Gen Sarath Chand, on Tuesday deposed to the Parliamentary Panel on Defence that Budget 2018-19 had “dashed our hopes” of adequate modernisation of the force.

The marginal increase in the defence budget only accounted for inflation, he said.

“The Budget 2018-19 has dashed our hopes and most of what has been achieved has actually received a little setback,” Chand told the panel.

This may end in the foreclosure of 25 ‘Make in India’ Defence projects that are currently in the pipeline, he added.

Moreover, he said that the committed liabilities of 2017 will now pass over into 2018. “Allocation of Rs 21,388 crore foe modernisation is insufficient even to cater for committed payments of Rs 29.033 crore for 125 ongoing schemes, emergency procurement and other requirements,” Chand told the parliamentary panel.

He said Armed Forces has “hardly any funds” for modernization in 2019, with 68 percent of the Army’s equipment of vintage category and only 8 percent in the “state of the art” category.

He also raised concerns over the future of Future Ready Combat Vehicles. According to the Army, there was a shortage of Rs 12,296 crore in the capital budget of the Ministry of Defence. “We have no choice but to leave out some priority acquisition cases. 63% of Army budget goes in to paying salaries, 14% for modernization. We need 20-25% of Army Budget for modernization,” he said.

The parliamentary panel expressed alarmed by Chand’s statement, saying that they were aghast to note this dismal scenario. Allocation for services have to be suitably enhanced, they said

The budget for the Ministry of Defence was estimated at Rs 2.95 lakh crores, which does not include the budget for Defence Pensions.

The total defence outlay of Rs. 2.94 lakh crore is a hike of 7.81% compared to the allocation made to the MoD last year. While this was an increase from last year and was 12.1% of the Central government’s total expenditure, the defence budget’s share of the GDP is the lowest it has ever been since the 1962 war between India and China.

In the 2018-19 Union Budget, the amount of Rs. 2.95 lakh crore works out to around 1.58% of India’s Gross Domestic Product (GDP). The last time the share of defence in the GDP was lower than this was in the 1962 Union Budget, when a war had broken out between India and China in October. Following the war, the share of defence in the GDP was increased from 1.5% to 2.31% in the 1963 Union Budget.

Of the total defence Outlay, Rs. 1.95 lakh crore was allocated for revenue expenditure (which includes day-to-day expenditures of the armed forces) and Rs. 99,500 lakh crore was allocated for capital expenditure (which includes capital expenditure and modernization). The Defence Capital expenditure is up from Rs. 86, 529 crores. This is an increase of Rs. 13,000 crores, which gives the armed forces some more leeway to modernize its ageing equipment.

The Defence Pension, which is over and above the defence budget, was pegged at Rs. 1.08 lakh crore. This is the first time India will spend more on pensions than it will on capital expenditure. Moreover, this is also the first time the pension amount has breached the Rs. 1 lakh crore mark. This is a whopping rise of 26.6% from the Rs. 85,740 crore allocated for Defence Pensions last year.

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